Non-financial business economy, UK (Annual Business Survey): 2013 provisional results

Size and growth within the UK's non-financial business sectors: non-financial services, distribution, production, construction and agriculture.

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This is an accredited national statistic.

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Release date:
13 November 2014

Next release:
23 July 2015

1. Main points

  • In 2013 the approximate Gross Value Added at basic prices (aGVA) of the UK Non-Financial Business Economy reached £1 trillion for the first time, with an estimated value of £1,012.6 billion. This amount represents the income generated by businesses in the UK, less the cost of goods and services used to create this income

  • Between 2012 and 2013, aGVA increased by 8.1% (£76.3 billion), the largest annual percentage increase since 1997. This increase is a continuation of the recovery seen between 2009 and 2012 and takes aGVA to a level 11.3% (£103.0 billion) above that seen in 2008, at the start of the recession

  • For the first year since the start of the recession in 2008 all sectors of the UK Non-Financial Business Economy, as measured by the Annual Business Survey (ABS), saw growth in aGVA between 2012 and 2013

  • The Non-Financial Service sector, which accounts for over half (54.7%) of aGVA in the UK Non-Financial Business Economy, contributed most to the increase in aGVA. The sector’s increase of 9.7% (£48.9 billion) between 2012 and 2013 was the fourth consecutive annual increase, taking it to 25.1% (£111.1 billion) above the level seen in 2008

  • The Production sector, which accounts for just over a fifth of aGVA in the UK Non-Financial Business Economy, saw an increase in aGVA of 4.7% (£10.0 billion) between 2012 and 2013. The increase sees Production sector aGVA above the level in 2008 for the first time

  • The Distribution sector, which accounts for just over a seventh of aGVA in the UK Non-Financial Business Economy, also saw an increase in aGVA of 6.5% (£9.3 billion) between 2012 and 2013. This follows two consecutive annual decreases between 2010 and 2012, with the level in 2013 remaining below the level seen in 2008

  • The Construction sector, which accounts for 7.9% of aGVA in the UK Non-Financial Business Economy, saw an increase in aGVA of 10.7% (£7.7 billion) between 2012 and 2013. This is the third consecutive year of growth, which leaves Construction aGVA £4.9 billion lower than the level in 2008

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2. Overview

Estimate of the size and growth of the UK Non-Financial Business Economy for 2013 as measured by the Annual Business Survey (ABS), are presented in this release. It is the key resource for understanding the detailed structure, conduct and performance of businesses across the UK. The release covers:

  • non-financial services (includes professional, scientific, communication, administrative, transport, accommodation and food, private health and education, entertainment services)

  • distribution (includes retail, wholesale and motor trades)

  • production (includes manufacturing, oil and gas extraction, energy generation and supply)

  • construction

  • parts of agriculture (includes agricultural support services, forestry and fishing)

Together these industries represent the UK Non-Financial Business Economy and account for around two thirds of the whole economy of the UK in terms of Gross Value Added. Public administration and defence, public sector health and education, finance and farming make up the difference between the UK Non-Financial Business Economy and the whole economy.

Estimates published in this release include turnover, purchases, approximate Gross Value Added at basic prices (aGVA) and employment costs. All data are reported at current prices (effect of price changes included).

Where the recession is mentioned it refers to the contraction of Gross Domestic Product (GDP) that started in 2008, the year from which a consistent ABS time series is available. For more information about the survey see the background notes.

The ABS has a wide range of uses: for example, ABS statistics are essential contributors to the UK National Accounts, including the measurement of GDP , they are supplied to Eurostat to meet the requirements of the European Structural Business Statistics (SBS) Regulation, and are used by the devolved administrations and central and local government to monitor and inform policy development.

The ABS also recently published its Exporters and Importers, GB, 2013 and Business Ownership in the UK, 2012 releases. For other uses see background note 3.

Questions often asked of the ABS release are 'What is aGVA?' and ‘How does the measure of aGVA differ from the GVA measure in the National Accounts?’. For an overview of aGVA please see our new infographic 'What is aGVA?'. National Accounts carry out coverage adjustments, conceptual adjustments and coherence adjustments. The National Accounts estimate of GVA uses input from a number of sources, and covers the whole UK economy, whereas ABS does not include farming, financial or public sectors. ABS total aGVA is around two thirds of the National Accounts whole economy GVA because of these differences. For further information on aGVA, see background note 8. There is also a recently published article ‘ A Comparison between ABS and National Accounts Measures of Value Added’ (462.3 Kb Pdf) which provides more detail.

ONS makes every effort to provide informative commentary on the data in this release. Where possible, the commentary draws on evidence from businesses or other sources of information to help explain possible reasons behind the observed changes. However, in some places it can prove difficult to elicit detailed reasons for movements, for example, businesses may state a ‘change in the nature of business activity’. Consequently, it is not possible for all data movements to be fully explained.

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3. Your views matter

We constantly aim to improve this release and its associated commentary. We would welcome any feedback you might have, and would be particularly interested in knowing how you make use of these data to inform your work. Please contact us via email: abs@ons.gsi.gov.uk or telephone Jon Gough on +44 (0)1633 456720.

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4. Interactive Wheel for the UK non-financial business economy

Use the Interactive Wheel to investigate which sectors contribute most to the UK Non-Financial Business Economy. Focus on the Business Economy as a whole or each sector and switch between aGVA, Turnover and Purchases.

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5. UK non-financial business economy, Sections A-S (part)

In 2013, the income generated by businesses in the UK, less the cost of goods and services used to create this income was estimated to be £1,012.6 billion. This amount represents the approximate Gross Value Added at basic prices (aGVA) of the UK Non-Financial Business Economy. Between 2012 and 2013 aGVA increased by 8.1% (£76.3 billion); a continuation of the recovery seen between 2009 and 2012. This increase resulted in aGVA reaching £1 trillion for the first time, and was 11.3% (£103.0 billion) above the level seen in 2008, at the start of the recession.

The main components of aGVA are:

  1. turnover (the main component of income)

  2. purchases (the main component of the consumed goods and services)

The consecutive annual increases seen in aGVA follow a similar pattern of increases in both turnover and purchases. Turnover increased by 6.8% (£225.6 billion) between 2012 and 2013, while purchases of goods, materials and services increased at a similar rate of 6.9% (£161.0 billion), resulting in an 8.1% growth in aGVA. As with aGVA, turnover and purchases were above levels seen in 2008 at the start of the recession for the third consecutive year (see Figure 1).

The recession and recovery described by the ABS between 2008 and 2013 is broadly in line with Gross Domestic Product (GDP) figures published in the National Accounts. Both the ABS aGVA estimates and the latest National Accounts GDP estimates (taken from the Preliminary Estimate for Q3 2014 show a fall between 2008 and 2009 and now four consecutive annual increases from 2009 to 2013 led by the Service sector.

A list of industries which are included in the ABS measure of the UK Non-Financial Business Economy, can be found in background note 8.

For the first year since the start of the recession in 2008 all sectors of the UK Non-Financial Business Economy, as measured by ABS, saw growth in aGVA between 2012 and 2013 (see Figures 2 and 3).

Non-Financial Services, the largest industry sector of the UK Non-Financial Business Economy contributed most to the increase in aGVA. The Non-Financial Service sector aGVA rose by 9.7% (£48.9 billion) between 2012 and 2013, the fourth consecutive annual increase, taking aGVA to £553.9 billion.

The Production sector saw an increase of 4.7% (£10.0 billion) in aGVA following a slight fall between 2011 and 2012. This increase sees aGVA for the Production sector at £223.6 billion which is above the £222.5 billion seen in 2008, at the start of the recession, for the first time.

The Distribution sector experienced an increase in aGVA for the first time in three years, with a rise of 6.5% (£9.3 billion) between 2012 and 2013. This increase took aGVA to £153.4 billion, which is still below the £157.8 billion seen in 2008.

The Construction sector experienced growth in aGVA for the third consecutive year, increasing by 10.7% (£7.7 billion) from £72.2 billion in 2012 to £79.9 billion in 2013. However, as with the Distribution sector, aGVA still remains below the level seen in 2008 (£84.8 billion).

The Agriculture (part), forestry and fishing sector experienced the largest percentage rise in aGVA of all the sectors, with a 28.4% (£0.4 billion) increase between 2012 and 2013. At £1.8 billion, aGVA for the industry is now above the level seen in 2008 for the first time.

Figure 2: UK Non-Financial Business Economy, details of aGVA by sector, 2008-2013

Chart

Source: Office for National Statistics
Notes:
  1. Excludes Financial and insurance; Public administration and defence; Public provision of Education; Public provision of Health and all medical and dental practice activities
  2. Agriculture (part: excluding crop and animal production), forestry & fishing data are excluded from the line charts as the values are negligible on a comparable scale

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6. Non-financial service industries, Sections H-S (part)

Over half (54.7%) of the estimated aGVA total of £1,012.6 billion in 2013 for the UK Non-Financial Business Economy was generated by the Non-Financial Service industries.

Between 2012 and 2013 Non-Financial Service turnover increased at a higher rate than purchases, 7.0% (£74.9 billion) compared to 5.6% (£31.3 billion). Together with a rise in stock levels and changes in subsidies and taxes, this resulted in aGVA rising by 9.7% (£48.9 billion). This is the fourth consecutive year of growth in aGVA for the sector, following the fall between 2008 and 2009. Turnover, purchases and aGVA are now well above the level seen in 2008 at the start of the recession (see Figure 4).

All of the industry sections within the Non-Financial Service sector continued to see increases in aGVA between 2012 and 2013 (see Figures 5 and 6).

Those industries which have made the largest contributions to growth are:

  • professional, scientific & technical activities (Section M)

  • administrative & support service activities (Section N)

  • information & communication (Section J)

  • arts, entertainment & recreation (Section R)

  • transport & storage (Section H)

These industries, which together accounted for an increase in aGVA of £30.7 billion, are described in more detail after Figure 5b.

Figure 5a: Non-financial services, details of aGVA by section, 2013

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Source: Office for National Statistics
Notes:
  1. Excludes Financial and insurance; Public administration and defence; Public provision of Education; Public provision of Health and all medical and dental practice activities

Figure 5b: Non-Financial Services, details of aGVA by section, 2008-2013

enter image description here

Source: Office for National Statistics
Notes:
  1. Excludes Financial and insurance; Public administration and defence; Public provision of Education; Public provision of Health and all medical and dental practice activities

Professional, scientific & technical activities (Section M)

Turnover in Professional, scientific & technical activities increased by 9.9% (£20.6 billion) between 2012 and 2013, with purchases showing an increase of 13.9% (£12.5 billion). This resulted in growth of 8.6% (£10.3 billion) in aGVA, resulting in aGVA remaining above that reported for 2008 for the third consecutive year.

This broad section, which covers a range of industries from Legal & accounting activities to Advertising & market research and Veterinary activities, saw increases in aGVA in almost all its divisions between 2012 and 2013. Those having the largest impact on aGVA growth were Legal & accounting activities (Division 69) and Architectural & engineering activities; technical testing & analysis (Division 71) which between them contributed £8.3 billion to the increase in aGVA. However, Scientific Research & Development (Division 72) showed a decrease of £1.5 billion in aGVA over this period which may be due to lack of investment in research since the economic downturn.

Administrative & support services (Section N)

Between 2012 and 2013 Administrative & support services saw turnover rise by 8.9% (£15.4 billion), while purchases increased by 9.0% (£7.7 billion) leading to an aGVA increase of 9.5% (£8.3 billion).

The main industries contributing to growth within Administrative & support services were Office administrative, office support & other business support activities (Division 82) where aGVA increased by 14.1% (£2.8 billion). Employment activities (Division 78) also made a substantial contribution with an 8.9% (£2.3 billion) increase in aGVA.

Information & communication (Section J)

Turnover in Information & communication increased by 4.6% (£8.8 billion) between 2012 and 2013 which, coupled with a smaller 3.5% (£3.4 billion) increase in purchases, resulted in an increase in aGVA of 6.7% (£6.3 billion) between 2012 and 2013.

The main division causing the growth in aGVA within this section was Computer programming, consultancy & related activities (Division 62), with an increase of 14.8% (£5.9 billion) between 2012 and 2013. This increase could be attributed to growth in the UK games industry.

Arts, entertainment & recreation (Section R)

Turnover in Arts, entertainment & recreation increased by 8.4% (£9.3 billion) between 2012 and 2013, while purchases increased by 5.4% (£4.9 billion) leading to a 35.6% (£5.9 billion) rise in aGVA. This growth was driven by Gambling & betting (Division 92) where aGVA increased by a significant 64.9% (£3.4 billion). The growth in this industry is likely to be due to the types and geographical spread of the interactive entertainment industry.

Transport & storage (Section H)

Turnover in Transport & storage increased by 4.2% (£6.3 billion) between 2012 and 2013, with purchases rising by 0.5% (£0.5 billion) resulting in a 9.0% (£5.8 billion) increase in aGVA.

The main divisions contributing to aGVA growth within Transport & storage were Land transport & transport via pipelines (Division 49), and Warehousing & support activities for transportation (Division 52). Increases in this sector may be related to the effect of the internet economy. Data on the retail sector indicates that turnover from mail order and via the internet continued to increase at a higher rate than turnover from shops. An increase seen in Warehousing & support activities for transportation is likely to partly result from the storage of items ordered from the internet.

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7. Production industries, Sections B-E

The Production sector in 2013 provided just over a fifth (22.1%) of the estimated aGVA total of £1,012.6 billion for the UK Non-Financial Business Economy.

Between 2012 and 2013 Production sector turnover and purchases increased by 2.7% (£18.9 billion) and 3.1% (£14.3 billion) respectively. Together with rises in stock levels and changes in taxes, this led to an increase in aGVA of 4.7% (£10.0 billion), which followed a slight fall between 2011 and 2012. The increase sees Production sector aGVA above the level in 2008, at the start of the recession, for the first time (see Figure 7).

Manufacturing (Section C), which contributes 70% of Production sector aGVA, saw a rise in aGVA of 5.8% (£8.6 billion) between 2012 and 2013, and was the main reason for overall growth.

Over the same period the other sections in the Production sector: B (Mining & quarrying), E (Water & waste management) and D (Energy generation & supply), also saw increases in aGVA of 2.9% (£0.7 billion), 2.2% (£0.4 billion) and 1.1% (£0.3 billion) respectively (see Figures 8 and 9).

Figure 8: Production, details of aGVA by section, 2008-2013

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Source: Office for National Statistics

Manufacturing (Section C)

The divisions contributing nearly half (46.3%) of Manufacturing aGVA are (see Figure 10):

  • Manufacture of food products (Division 10)

  • Manufacture of Fabricated metal products, except machinery & equipment (Division 25)

  • Manufacture of motor vehicles, trailers & semi-trailers (Division 29)

  • Manufacture of Machinery & equipment n.e.c. (Division 28)

  • Manufacture of other transport equipment (Division 30)

Between 2012 and 2013 Manufacturing saw increases of 1.8% (£9.1 billion) in turnover and 1.2% (£4.1 billion) in purchases which, together with rises in stock levels and changes in taxes, contributed to an increase in aGVA of 5.8% (£8.6 billion).

The increase in Manufacturing aGVA was mainly in:

  • manufacture of motor vehicles, trailers & semi-trailers (Division 29)

  • manufacture of other transport equipment (Division 30)

  • manufacture of food products (Division 10)

  • repair and installation of machinery and equipment (division 33)

  • manufacture of basic metals (Division 24)

Together these five divisions contributed £8.3 billion to the overall £8.6 billion increase in Manufacturing aGVA (see Figures 11 and 12).

Accounting for a third of the overall manufacturing growth was Manufacture of motor vehicles, trailers & semi-trailers (Division 29), where the aGVA increase of £2.9 billion can be largely attributed to the increase in sales and, in particular, export of high-end vehicles and also hybrid cars.

New overseas contracts awarded to businesses in Manufacture of other transport equipment (Division 30) contributed to the aGVA increase of £2.2 billion.

Across Manufacturing almost two thirds (17 out of 24) of the divisions contributing to this sector experienced increases in aGVA between 2012 and 2013.

Other reasons cited by businesses as contributing to the rise in Manufacturing aGVA were businesses restructuring, the take-over of a similar business, the gaining of new contracts and reduction in purchases.

The 48.6% (£1.0 billion) decrease in aGVA for Manufacture of coke & refined petroleum products (Division 19) is caused by the level of duty paid on oil refining. Due to the small size of this division in terms of Manufacturing aGVA, annual changes should be viewed with care.

Other production (Sections B, D-E)

This sector consists of Mining & quarrying (Section B, which includes oil and gas extraction), Energy generation & supply (Section D) and Water supply, sewerage, waste management and remediation activities (Section E). The sector saw increases in turnover and purchases of 5.3% (£9.9 billion) and 8.3% (£10.3 billion) respectively, which resulted in an increase in aGVA of 2.0% (£1.3 billion).

The industry contributing the most to this growth was Mining & quarrying.

Mining & quarrying (Section B, Which includes oil and gas extraction)

Turnover in Mining & quarrying increased by 3.4% (£1.7 billion) while purchases increased by 9.2% (£2.5 billion). Together with increases in work of a capital nature, this resulted in a 2.9% (£0.7 billion) rise in aGVA.

The main contributor was Other Mining and Quarrying (Division 08) where the increase in aGVA was generally attributed to increased margins and procurement savings and also an increase in demand for business.

Energy Generation & Supply (Section D)

Electricity generation & supply also saw an increase between 2012 and 2013. Turnover increased by 5.5% (£5.8 billion) and purchases by 7.1% (£5.8 billion), which together with rising stock levels resulted in an aGVA increase of 1.1% (£0.3 billion).

Reasons given for this increase were a growth in business in onshore/offshore wind and offshore gas and price increases for gas and electricity.

The continuing population rise of micro-businesses (with less than 10 people in employment) in this sector is thought to be due to the growth of small producers of renewable energy encouraged by various green grants, subsidies and "feed in tariffs". Between 2012 and 2013 the number of micro-businesses in this area increased by 42.5% (to over 2,300).

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8. Distribution industries, Section G

The Distribution industries in 2013 contributed 15.1% to the estimated aGVA total of £1,012.6 billion for the UK Non-Financial Business Economy.

This sector saw an 8.4% (£115.8 billion) rise in turnover and an 8.8% (£105.8 billion) increase in purchases between 2012 and 2013. This contributed to the increase in aGVA of 6.5% (£9.3 billion). This is the first annual increase since 2010, with aGVA for the Distribution sector at its highest level since the start of the recession in 2008 (see Figure 13).

Increases in aGVA were seen in all three divisions within Distribution (see Figures 14 and 15), with the largest increase between 2012 and 2013 seen in Retail (excluding Motor Trades - Division 47).

Figure 14: Distribution, details of aGVA by division, 2008-2013

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Source: Office for National Statistics

Retail (excluding motor trades) (Division 47)

Retail aGVA saw an increase of 7.3% (£5.4 billion) between 2012 and 2013. This growth in aGVA was a result of a 2.9% (£10.2 billion) increase in turnover and a smaller 2.1% (£5.9 billion) increase in purchases.

The increases in aGVA were driven by an 8.9% (£1.7 billion) rise in Retail sale in non-specialised stores (Group 47.1) which includes retail sales in super-stores and department stores.

Reports from businesses continued to indicate that turnover from mail orders and via the internet increased at a higher rate than turnover from shops. Although increasing, retail sales from mail order and the internet remains a small share of total turnover.

Wholesale (excluding motor trades) (Division 46)

Wholesale experienced an increase in turnover of 11.0% (£96.7 billion) and purchases of 11.3% (£91.2 billion) between 2012 and 2013 which resulted in an increase in aGVA of 5.1% (£2.5 billion).

The rise in aGVA between 2012 and 2013 was driven by Wholesale on a fee or contract basis (Group 46.1), which showed an increase of £1.4 billion.

Motor trades (wholesale and retail) (Division 45)

Between 2012 and 2013 both purchases and turnover increased again, by 7.2% (£8.7 billion) and 6.2% (£8.9 billion) respectively. This resulted in aGVA increasing by 6.6% (£1.5 billion), following a decrease last year.

Within Motor Trades, Sale of motor vehicles (Group 45.1) contributed most to the growth with a 9.6% (£1.1 billion) increase in aGVA between 2012 and 2013. This increase comes after a slight fall of 0.4% (£0.1 billion) in aGVA between 2011 and 2012.

Notes for Distribution Industries, Section G

  1. Retail (Excluding Motor Trades) (Division 47)

    Please note that the ABS figures for the Retail industry should not be compared directly with the annual value non seasonally adjusted’ figures in the monthly 'Retail Sales Inquiry' release because:

    • the ABS figures cover the United Kingdom, while the 'Retail Sales Inquiry' covers Great Britain only
    • the ABS ‘total’ turnover figures in the main results tables represent sales to both business and the public and are published excluding VAT, while those in the 'Retail Sales Inquiry' represent sales to the public only and are published including VAT
  2. The ABS does publish ‘retail’ turnover figures (for sales to the public only) in its Retail Commodities tables in the June release which are inclusive of VAT and will be closer to 'Retail Sales Inquiry' figures, however;

    • the ABS ‘retail’ turnover figures includes data for National Health Service receipts and commissions whereas the 'Retail Sales Inquiry' do not
    • Retail Sales Inquiry does not cover household spending on services bought from the retail sector as it is designed to only cover goods
    • although both quote figures for a calendar year, the 'Retail Sales Inquiry' produce monthly output measures which include average weekly value and volume estimates. The value estimates reflect the average total turnover that businesses have collected over a standard reporting period, while the volume estimates are calculated by taking the value estimates and adjusting to remove the impact of price changes. ABS figures are based on annual responses from businesses covering a range of financial years
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9. Construction industries, Section F

The Construction Industries `contributed 7.9% to the estimated aGVA total of £1,012.6 for the UK Non-Financial Business Economy in 2013.

Construction turnover increased by 8.0% (£15.1 billion) between 2012 and 2013 with purchases increasing by 7.9% (£9.2 billion) to give overall growth in aGVA of 10.7% (£7.7 billion). This is the third consecutive year of growth, which leaves Construction aGVA £4.9 billion lower than the level in 2008, before the recession (see Figure 16).

As in the previous year, the growth in Construction was mainly in Construction of buildings (Division 41), see Figures 17 and 18. However, the other two divisions within Construction also contributed to the rise for 2013; aGVA in Civil engineering (Division 42) rose by 12.7% (£1.6 billion) and Specialised construction activities (Division 43) increased by 3.4% (£1.2 billion).

Figure 17: Construction, details of aGVA by division, 2008-2013

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Source: Office for National Statistics

Construction of buildings (Division 41)

Construction of buildings, which was the main cause for the growth in the Construction sector, experienced an increase in aGVA of 19.1% (£4.9 billion) between 2012 and 2013. This was a result of a 13.3% (£9.9 billion) increase in turnover and a 14.1% (£6.7 billion) increase in purchases, coupled with a 417% (£1.8 billion) rise in stock levels.

As was the case in 2012, this year’s main reason for the increase in aGVA was in the Development of building projects (Group 41.1).

Notes for construction industries, Section F

  1. Please note that the ABS figures for the Construction industries should not be compared directly with annual figures in the monthly ‘Output in the Construction Industry’ release because:

    • the ABS figures cover the United Kingdom, while the 'Output in the Construction Industry' covers Great Britain only
    • the two surveys measure different concepts of this industry
    • while both quote figures for a calendar year, the ‘Output in the Construction Industry’ are based on the aggregate of the responses to 12 monthly surveys, whereas ABS figures are based on annual responses covering a range of business years
    • the ABS figures will always be larger than those in the ‘Output in the Construction Industry’ because the latter excludes: Property developers (SIC 41.1); Payment on purchased services (architects, technical engineering, etc.); Payment to subcontractors, unless the subcontractors are not classified to construction and therefore are not part of the survey; Value of land; Value of materials sold (which are not part of a structure); and Fixtures, equipment and tools that are sold
    • the ABS figures include secondary activities related to businesses classified within the construction sector, while the ‘Output in the Construction Industry’ covers only the construction activity of the businesses
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10. Agriculture (part), forestry and fishing, Section A

The ABS covers only hunting, forestry, fishing and the support activities to agriculture. Commentary is therefore limited because the sector’s size in terms of economic output, as measured by the ABS, is small in comparison to the other sectors of the UK Non-Financial Business Economy. However, data for these parts of Section A can be found in the reference tables linked to this bulletin.

Note that the values quoted below for Section A are in £ millions.

The part of Section A covered by ABS showed rises in turnover of 23.7% (£852 million) between 2012 and 2013 and in purchases of 18.6% (£441 million) which led to an increase of 28.4% (£399 million) in aGVA between 2012 and 2013. The main contributor to this increase was Support activities to agriculture & post-harvest crop activities (Group 01.6).

This rise means that, at £1,804 million, aGVA is now higher than the level in 2008, at the start of the recession.

Comparable GVA figures for the rest of Agriculture (which includes crop and animal production) are available in Chapter 3 (Table 3.2) of the Agriculture in the United Kingdom release published annually by the Department for Environment, Food and Rural Affairs (DEFRA), and shows a value of £9,222 million for 2013.

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11 .Background notes

  1. Annual Business Survey – ABS

    The Annual Business Survey (ABS), formerly the Annual Business Inquiry part 2 (ABI/2), produced by the Office for National Statistics (ONS), is the key resource for understanding the detailed structure, conduct and performance of businesses across the UK.

    The ABS survey samples approximately 62,000 businesses in Great Britain from a population of over 1.8 million businesses in the sample frame on the Inter-Departmental Business Register (IDBR). The responding businesses provide information such as their turnover, purchases, employment costs, capital expenditure and stocks.

    Approximately 11,000 businesses in Northern Ireland are sampled by the Department of Finance and Personnel Northern Ireland and contribute to the UK estimates.

    In this National Statistics publication, a range of estimates are published including turnover, purchases, approximate Gross Value Added at basic prices (aGVA) and employment costs for industry sectors and the UK Business Economy. All data are reported at current prices (effect of price changes included).

    Visit the ABS webpages for more in-depth information about the ABS, plus the latest news on survey changes and developments.

    An ABS Glossary of terms (345.4 Kb Pdf) is available to help interpret the technical descriptions and abbreviations used throughout this bulletin.

  2. ABS quality information

    A Quality and Methodology Information (QMI) report for the ABS can be found on the ONS website. The aims of the QMI report are to provide users with a greater understanding of ONS’s statistics, their uses and the methods that are used to produce them.

    The ABS is a sample survey. As with all estimates obtained from sample surveys, ABS estimates are subject to various sources of error. The total error in a survey estimate is the difference between the estimate derived from the data collected and the true (unknown) value for the population. The total error consists of two main elements; the sampling error and the non-sampling error. The ABS was designed to minimise both these errors. The standard error is the estimated value of the sampling error. The estimate for a variable, plus and minus the standard error for the variable, gives a range in which the true unknown value for the population might lie. The closer the standard error is to 0, the more reliable the estimate.

    The coefficient of variation is the standard error of a variable divided by the survey estimate, and it is used to compare the relative precision across surveys or variables. The closer the coefficient of variation is to 0, the more reliable the estimate. Standard errors and coefficients of variation for turnover, aGVA, purchases and employment costs are available in the quality measures table published with this release.

    For the first time ABS is able to publish Standard Errors and Coefficients of Variation for the regional data (365 Kb Excel sheet). Information about the methodology used in their calculation can be found in the Standard Errors for Regional Annual Business Survey Data (2.2 Mb Word document) report.

    More detailed information on these and other quality and methodology issues is available in the ABS Technical Report published on the ABS webpages.

    Selective editing

    When ABS responses are received, checks are undertaken to ensure the information is correct. This is known as editing and validation. Selective editing was used to validate responses for the first time for the 2011 results using software called SELEKT. SELEKT is a generic selective editing tool which highlights responses which appear to be in error if they fall outside the range of what is expected and have a large influence on key estimates. Those responses with the highest score are prioritised for editing and validation. This increases the efficiency of the editing process by focusing on the responses with the highest impact and importance.

    The introduction of selective editing should at least maintain, if not improve the quality of the ABS results as it should: minimise the bias introduced by processing (removing over-editing); remove non-value adding activities from the process; and focus resources to errors that impact on the results.

    However, the full impact on quality is not yet known. This will continue to be monitored and any updates will be included with future ABS releases. For more information on SELEKT, see Chapter 5 of the ABS Technical Report (1.68 Mb Pdf).

  3. Uses and users of ABS statistics

    ABS outputs may be used to answer questions such as:

    • how much wealth has been created in a particular industry?
    • has there been a shift in activity from one industrial sector to another, and which industry groups/classes/subclasses are driving the change?
    • are any industries particularly dominant in specific regions or countries of the UK and are there structural changes over time?
    • how productive is a particular industry, such as the chemicals sector, and what is its operating profitability?

    ABS data for 2012 recently contributed data to stories about the manufacturing, aerospace and textile industries

    There are a wide range of users that view, download and utilise the ABS data. Key users of the output include:

    National Accounts: The statistics produced help to improve the overall quality of the UK National Accounts and the measurement of Gross Domestic Product (GDP). The ABS forms a major data input to the production of Input-Output Annual Supply and Use Tables used to set the annual level of UK GDP. The Supply and Use tables show the sales and purchases relationships between consumers and producers by industry (see chapter 2 of UK National Accounts, Blue Book 2011 edition). For the latest available comparison with National Accounts GVA see the figures for 2012 in the Blue Book 2014 edition table 2.3.

    Indices of Services and Production: Use ABS data to calculate the weights used to produce the indexes, and to calculate the deflation of turnover.

    Eurostat: ABS is the main source of data supplied to Eurostat to meet the requirements of the European Structural Business Statistics (SBS) Regulation. This regulation ensures that key statistics on the structure of businesses are composed in a way which is comparable across Europe. Eurostat use SBS data to inform and monitor European Union policy.

    Scottish Government and the Welsh Government: The financial information is also used by the Scottish Government and the Welsh Government in the compilation of regional and country specific Input-Output tables (For example Scottish Input-Output) and Indices of Production (For example Welsh Indices of Production). The resulting outputs are used to inform and monitor policy.

    Department for Business, Innovation & Skills (BIS): Use ABS data to assess the structure and performance of UK industries.

    Local Authorities: Data are used for economic research, planning purposes, lobbying and economic strategy development.

    Business consultants: Use these data to understand trends in industry sectors and UK regions.

    Marketing experts: Use these data to undertake demographic mapping and market segmentation.

    Other local and national government departments and bodies, businesses, academics and the general public use these data for research, modelling or forecasting and to track industry trends.

    More detailed information on the uses and users of ABS is available in the ABS Technical Report (1.68 Mb Pdf) published on the ABS webpages.

  4. Your views matter

    We are constantly aiming to improve this release and its associated commentary. We would welcome any feedback you might have, and would be particularly interested in knowing how you make use of these data to inform your work. Please contact us via email: abs@ons.gsi.gov.uk or telephone Jon Gough on +44 (0)1633 456720.

    The Changing Shape of UK Manufacturing, an event coordinated jointly with the Department for Business, Innovation and Skills (BIS), took place in October 2014. The event featured a range of talks from users, producers and suppliers of manufacturing statistics, not just from central government and the devolved administrations, but also local government, media, business representatives and researchers. To view the content of the day, please visit Storify.

  5. ABS revisions

    ABS estimates are revised in line with the ABS Revisions Policy. The revisions policy is available in the ABS Technical Report (1.68 Mb Pdf) to assist users with their understanding of the cycle and frequency of data revisions. Users of this release are strongly advised to read this policy before using the data for research or policy related purposes.

    Planned revisions usually arise from either the receipt of additional data or the correction of errors to existing data by businesses responding to the ABS. Those of notable magnitude will be highlighted and explained.

    Revisions to published ABS regional results for the previous reference year can be expected in the latest reference year’s data release.

    As an example of the timing and scale of revisions, provisional regional data for 2011 were first published in July 2013 and included Insurance & reinsurance industries (part of Section K). The revised results for 2011 in this July 2014 release exclude Insurance & reinsurance industries. The revision to aGVA between these two regional releases, comparing the UK Business Economy to the UK Non-Financial Business Economy, is -6.2% (-£60.3 billion). If Insurance & reinsurance industries are removed from the July 2013 release, the revision to aGVA falls to -2.2% (-£20.7 billion).

    Revisions to data provide one indication of the reliability of key indicators. A table showing the size of revisions is published alongside the statistical bulletin released in June each year.

    All other revisions will be regarded as unplanned and will be dealt with by non-standard releases. All revisions will be released in compliance with the same principles as other new information.

  6. International comparisons

    International comparisons of structural business statistics are available from Eurostat (for the European Union), and the Organisation for Economic Co-operation and Development (OECD):

    Eurostat: analysis of Structural Business Statistics.

    OECD : follow the link to the structural analysis database, under the industry and services theme.

  7. Response Rates and Compliance Costs

    The figures in this release are based on an annual survey of businesses. Provisional 2013 results are based on a response rate of 75.3%. Response rates by different sectors can be found in the Quality Measures (794.5 Kb Excel sheet) accompanying the UK Non-Financial Business Economy, 2012 Revised Results, with a summary provided in Table 1.

    For an estimate of the cost to GB businesses for providing their data to the ABS (known as compliance cost) see appendix B of the ONS Compliance Plan. (215.7 Kb Pdf)

  8. General Information

    These points should be noted when using ABS results

    ABS coverage

    The results in this Statistical Bulletin represent approximately two-thirds of the UK economy in terms of Gross Value Added. In previous releases the UK Business Economy has been referred to as the Whole Economy.

    The industries covered are:

    • agriculture (support activities SIC 01.6 and hunting & trapping 01.7 only), forestry and fishing - Section A
    • production - Sections B-E
    • construction - Section F
    • distribution - Section G
    • non-financial services - Sections H, I, J, L, M, N, P (private provision only), Q (private provision only in SIC 86.1 and 86.9), R and S

    The main industries excluded are:

    • agriculture (SIC 01.1, 01.2, 01.3, 01.4 and 01.5 in Section A)
    • financial and insurance (Section K)
    • public administration and defence (Section O)
    • education (public provision in Section P)
    • health (SIC 86.2, public provision in SIC 86.1 and 86.9 in Section Q)

    Data for a small part of the Financial and insurance sector (Insurance and reinsurance only (SIC 65.1 and 65.2)) has been collected by the ABS since 2008 and was previously included in the results. This was the only part of Financial and Insurance Activities (Section K) covered by the survey. As with any new time-series, estimates for these industries have remained experimental while ongoing quality assurance has taken place. This quality assurance has led the figures to be revised substantially in recent years with a resulting break in the series between 2009 and 2010. Following discussions with key users, ONS decided to remove this experimental series from ABS releases for the reference year 2012 onwards due to the continued volatility of the data. The estimates for this series have been removed from releases since November 2013 to allow for a more detailed quality assessment to be undertaken. The removal of these series does not affect other industries published as part of this release and has no impact on any other financial statistics published by ONS.

    A review of the questionnaire for Insurance and Reinsurance businesses will be undertaken, alongside continued validation of returns to the survey, with the aim of reintroducing them to the ABS publications when the quality of the data has improved. Updates on progress will be available on the ABS News Pages.

    Standard Industrial Classification

    ABS results are classified according to the Standard Industrial Classification of Economic Activities (SIC) system. The UK is required by European legislation to have a system of classification consistent with the European Union’s industrial classification system. The system underwent a major review in 2007. ABS data have been collected and published on the SIC 2007 system since the reference year 2008. Other revisions to the system occurred in 1958, 1968, 1980, 1992, 1997, and 2003.

    UK SIC 2007 is divided into 21 sections, each denoted by a single letter from A to U. Each section can be uniquely defined by the next breakdown, the divisions (denoted by two digits). The divisions are then broken down into groups (three digits), then into classes (four digits) and, in several cases, again into subclasses (five digits). So for example we have:

    section C - manufacturing (comprising divisions 10 to 33)
    division 13 - manufacture of textiles
    group 13.9 - manufacture of other textiles
    class 13.93 - manufacture of carpets and rugs subclass 13.93/1 manufacture of woven or tufted carpets and rugs

    The full structure of SIC 2007 consists of 21 sections, 88 divisions, 272 groups, 615 classes and 191 subclasses in SIC 2007.

    Structural changes to businesses

    The business economy is constantly evolving as businesses merge, are taken over, or simply change the main focus of their business. These changes can result in the industry classification of a business changing over time. For example, if a business undertakes both manufacturing and wholesale activities, but most of its employment is within manufacturing, it will be classified to manufacturing. If the employment were to change substantially so that the majority worked in wholesale then the industry classification would change and the whole of the businesses turnover, for example, would move from manufacturing to wholesale. In industries where movements are common, or where large businesses are involved, these changes can themselves sometimes cause large changes in ABS estimates. This should be taken into consideration when changes over time are being assessed.

    Calculation of Gross Value Added Estimates

    Approximate Gross Value Added at basic prices (aGVA) is derived from the responses of businesses to questions asked on the ABS. It is a measure of the income generated by businesses, industries or sectors, less the cost of goods and services used to create the income. The main component of income is turnover, while purchases is the main component of the consumed goods and services. Stock levels which may rise or fall can also have an impact on aGVA, as can the values of subsidies received or duty paid. Businesses' labour costs (for example, wages and salaries) are paid from the value of aGVA, leaving a gross operating surplus (or loss) which is a good approximation for profit (or loss). The cost of capital investment, financial charges and dividends to shareholders are met from the gross operating surplus.

    aGVA is calculated in basic prices. That is, the valuation of output includes net taxes (taxes minus subsidies) on production, such as business rates, but not net taxes on individual products that result from the production process, such as Value Added Tax (VAT).

    Estimates of turnover and purchases from the ABS are used to produce estimates of output and intermediate consumption (and therefore GVA) in the National Accounts. However, many other sources (including surveys and administrative sources) are also used to produce National Accounts estimates. These include sources of data on taxation and inventories (which are preferred to the ABS as they are used consistently throughout all parts of the National Accounts), as well as own-use output and non-market output (as these activities are only partially covered by the ABS).

    There are differences between the two measures of gross value added in terms of coverage. For example, GVA covers the whole of the UK economy while aGVA covers the UK Non-Financial Business Economy, a subset of the whole economy that excludes large parts of agriculture, all of public administration and defence, publicly provided healthcare and education, and the financial sector.

    There are conceptual differences between the two measures of gross value added. For example, some production activities such as illegal smuggling of goods must be included in the National Accounts but are outside the scope of the ABS.

    There are three approaches to measuring GDP; one based on production activity, one based on expenditure, and one based on income. In theory, the three approaches should produce the same estimate of GDP. However, in practice this is never the case because the three approaches make use of different data sources, each with their own definitions and limitations. The three different estimates are therefore reconciled in a process known as Supply and Use balancing. The balancing process is informed by a variety of data sources, and results in adjustments to estimates of output and intermediate consumption. For many industries, the balancing adjustment is the greatest source of difference between estimates from the ABS and the National Accounts.

    More detailed information of the differences between aGVA and GVA is available in the ABS Technical Report (1.68 Mb Pdf) published on the ABS webpages. There is also a more detailed article ‘A Comparison between ABS and National Accounts Measures of Value Added’ (462.3 Kb Pdf) recently published by the ABS.

    Business register and employment survey

    The reference tables that support this release include estimates of employment. The ABS does not collect employment level information so instead this key information is taken from another source. In the past, employment data were collected via the Annual Business Inquiry / Part 1 (ABI/1), however, in 2009, ABI/1 was replaced with the Business Register and Employment Survey (BRES). The ABS and BRES are both optimal for their respective purposes, however caution should be taken when combining the financial data from the ABS and employment information from BRES to calculate estimates due to differences in methodology. More information on the differences between ABS and BRES is available in the ABS Technical Report (1.61 Mb Pdf) published on the ABS webpages.

  9. Disclosure control and symbols used

    It is sometimes necessary to suppress figures for certain items in order to avoid disclosing information about an individual business. Further information on why data are suppressed is available in the ONS Disclosure Control Policy (337 Kb Word document) or in the ABS Technical Report (1.68 Mb Pdf) .

    The following symbols are used throughout the ABS releases:

    * information suppressed to avoid disclosure
    .. not available
    - nil or less than half the level of rounding

  10. What’s new?

    Manufacturing aGVA growth charts (Figures 11 and 12) show amount and percentage of aGVA growth for each division in Manufacturing.

  11. National Statistics

    The United Kingdom Statistics Authority reviewed ABS outputs in their report “Assessment of compliance with the Code of Practice for Official Statistics: Statistics from the Annual Business Survey – Assessment Report 180”.

    Following the ABS response to the report the UK Statistics Authority have since designated these statistics as National Statistics, in accordance with the Statistics and Registration Service Act 2007 and signifying compliance with the Code of Practice for Official Statistics.

    Designation can be broadly interpreted to mean that the statistics:

    • meet identified user needs
    • are well explained and readily accessible
    • are produced according to sound methods
    • are managed impartially and objectively in the public interest

    Once statistics have been designated as National Statistics it is a statutory requirement that the Code of Practice shall continue to be observed.

  12. Social media

    Follow ONS on Twitter and receive up to date information about our statistics.

    Like ONS on Facebook to receive our updates in your newsfeed and to post comments on our page.

  13. Government Statistical Service (GSS) Business Statistics

    To find out about other official business statistics, and choose the right data for your needs, use the GSS Business Statistics Interactive User Guide. By selecting your topics of interest, the tool will pinpoint publications that should be of interest to you, and provide you with links to more detailed information and the relevant statistical releases. It also offers guidance on which statistics are appropriate for different uses.

  14. Discussing ONS Business Statistics Online

    There is a Business and Trade Statistics community on the StatsUserNet website. StatsUserNet is the Royal Statistical Society’s interactive site for users of official statistics. The community objectives are to promote dialogue and share information between users and producers of official business and trade statistics about the structure, content and performance of businesses within the UK. Anyone can join the discussions by registering via either of the links.

  15. ONS theme pages

    Statistics are available on the ONS web pages categorised by themes, subject areas, topics and sub-topics. If you are interested in statistics on a particular issue, navigating through the categories will identify all the statistics available that relate to the selected theme, topic or sub-topic.

    For Business themed short stories and articles please visit the Business and Energy theme page

  16. Special events

    ONS has published commentary, analysis and policy on 'Special Events' which may affect statistical outputs. For full details visit the Special Events page on the ONS website.

  17. Release policy

    ABS UK national results at the industry class level (4 digit Standard Industrial Classification 2007) are available free of charge via the 'Data in this release' button at the top of this publication, or from the ABS webpages on the ONS website. The published variables include turnover, purchases, aGVA and employment costs.

    Additional standard extracts containing more detail are available on request. Bespoke analyses are also available but there will be a charge for these. For more information about either of these services please email abs@ons.gsi.gov.uk, or telephone +44 (0)1633 456592 for standard extracts, or +44 (0)1633 456606 for bespoke special analyses

    Any bespoke analysis carried out for ABS customers will be available free of charge on the Published ad hoc data and analysis: Business and Energy web pages.

  18. Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: media.relations@ons.gsi.gov.uk

    These National Statistics are produced to high professional standards and released according to the arrangements approved by the UK Statistics Authority.

Back to table of contents

12 . Methodology

Contact details for this Statistical bulletin

Jon Gough
Rabs@ons.gov.uk
Telephone: +44 (0)1633 456720